GuocoLand Limited (“GLL” or the “Company”) is pleased to announce that its wholly-owned subsidiary, GuocoLand (China) Limited (“GLC”) was confirmed by the Nanjing Land Bureau to be the successful tenderer of Gujiaying Land Parcel Number 2005G36 (the “Site”) in a recent government land tender (“Acquisition”). The Land Use Right Contract in respect of the Site was executed with the Nanjing Land Bureau today.
The purchase consideration for the Site is Rmb650 million (US$79 million) and is payable in tranches to the Nanjing Land Bureau. GLC’s remittance of funds towards payment of the purchase consideration is subject to the requisite approvals of the relevant authorities including approval from the State Administration of Foreign Exchange. GLL will fund GLC’s contribution towards the land cost from its internal resources and borrowings.
The Site is situated opposite the scenic Purple Mountains in Xuanwu district in the eastern part of Nanjing City. It is a short drive from the Nanjing City centre at Xinjiekou and is easily accessible via the Huning Highway and Ninghang Road from the north and the Round-City Road from the south. The Site has a land area of approximately 296,002 square metres and consists of three plots, two of which are designated for residential development. The third plot is designated for commercial development. The tenure of the land use rights for the Site is 70 years for residential land and 40 years for commercial land. The Site is surrounded by several reputable universities and schools and can be developed into a resort style residential enclave with low to mid-rise apartment blocks comprising more than 2,000 units with retail outlets and recreational facilities which will cater to increasingly affluent homebuyers.
Besides Shanghai and Beijing, where GLC has established property operations, this Acquisition marks GLC’s entry into property development, investment and management activities in Nanjing. Nanjing is a thriving major city in the prosperous Jiangsu province of China with a population base of about 6 million. As it is situated in the lower reaches of the Yangtze River at a confluence of major transportation links, Nanjing is a major commercial port and industrial base and the heart of an entrepot for the Yangtze River delta region and inner China. Nanjing has a rapidly developing economy and has recorded stable economic growth with an annual average rate of 10% over the last 6 years. It has a rich cultural and historical heritage and is also a reputed centre for higher learning, making it one of the most livable and pleasant cities in China. The Acquisition is a good opportunity for GLC to establish property operations in a market where there will be steady demand by a growing pool of aspiring homeowners. This is in line with GLL’s strategy to establish embedded property businesses in major property markets in China through GLC and its subsidiaries which can be significant contributors to the GLL Group’s performance.
GLC has signed a joint venture agreement with Nanjing Fu Zhong Information Technology Group Co., Ltd (“Fu Zhong”) pursuant to which GLC will hold a 99% stake in the Gujiaying project whilst Fu Zhong will hold a 1% minority stake (“Joint Venture”). The joint venture between GLC and Fu Zhong will be a Chinese-Foreign Equity Joint Venture.
The Acquisition and Joint Venture are not expected to have any material effect on the earnings per share or net tangible assets per share of the GLL Group for the current financial year ending 30 June 2005.
None of the Directors or substantial shareholders of GLL has any interest, direct or indirect, in the Acquisition and the Joint Venture.
